More and more individuals are choosing to invest part of their capital to obtain benefits. And in this case, as in the case of companies, investment funds are a good objective to increase our revenues.
Today in the market we can access two major types of funds: the funds of independent companies, and the funds of financial groups, whether they are banks or insurers. Many individuals, due to the security that implies entrusting their income in a manager already known, bet on the funds of financial groups. However, is it better to invest in independent funds or funds from financial groups?
According to the results of a study carried out globally in general terms, independent funds obtain much more profitability than funds associated with financial groups. In total, the difference between one and another is estimated at 0.92 percent, or what is the same, 92 basis points per year.
This generalized situation throughout the world is also fulfilled in Spain. In this case, carrying out a study of different terms, independent funds always obtain better results. Both long and short term independent funds are winning. If the data of the last ten years are reviewed, these funds obtain a positive difference of 1.7 percent per year.
Why are independent funds more profitable than financial funds?
Undoubtedly one of the main reasons for the former to be more profitable than the latter are the associated costs. As a general rule, funds of a financial nature, whether they are banks or insurers, add to their expenses an annual commission for management that amounts to 0.2 percent. Which greatly reduces the benefits for the buyer.
Let’s make a direct comparison of some of the funds that have been contracted during this year.
These are undoubtedly two of the most well-known equity funds in the Spanish market. In this case, Metavalor has a management capital of 61 million euros compared to 59 million in Spanish Bankia Bolsa. The number of participants in the first one is lower than in the second one. While Metavalor has more than 2500 participants, Bankia Bolsa Española has almost 4000. Both equity funds charge their clients 2 percent of management fees and no percentage of success fees.
When we look at the three-year average annual yield of both funds, the data is clear: while Metavalor obtains a yield of 11.56 percent on average in this period, the case of Bankia is negative. Its average profitability over a period of three years is -3.91 percent.
Independent fund: Rent VS financial fund
In this case we are faced with two mixed funds where Caixabank is the one that manages more wealth within Spain today. However, despite having a huge wealth, it obtains a very low average annual return during the first three years. It also charges its clients a management fee of 1.60 percent against the 1 percent charged by the independent fund.
Unlike what happens with the Caixabank Equilibiro Standard, Renta 4 Pegasus exceeds profits by only three percentage points by four percentage points. While Renta 4 obtains a three-year average annual return of 2.25 percent, Caixabank Equilibro only achieves a return of 0.65 percent over the same period.